U.S. Export Growth 'Depends' on Heightened Demand, Federal Funding

"The manufacturing sector has yet to fully recover from the recession and will likely not reach its previous peak level of production until very late in 2014," said Don Norman, senior economist for the Manufacturers Alliance for Productivity and Innovation trade group.

Manufacturing output held nearly flat in May after falling the previous two months, the latest sign that the field is struggling. Output of consumer goods, including processed foods and paper products fell last month.

"The sequester will hurt growth through the end of the year, while slowing growth in emerging markets and a lengthy euro zone recession have muted foreign demand," said Erik Johnson, an economist at IHS Global Insight. "This is "¦ prompting businesses to remain ultra-cautious about hiring and capital spending."